DFA Settlement Fund Monies Released by the Court

A simple 4-page Court Order, a culmination point for one of the most complex farm and food class action litigations in United States history, will return $85 Million dollars to Southeast dairy farm communities in the coming weeks.

In an Order entered on December 11, 2013, US District Judge J. Ronnie Greer approved the disbursement of the DFA Settlement Funds in the Southeast Milk Litigation, following a Motion filed by Plaintiff’s Attorneys for the Dairy Farmer Class on November 26, 2013. The litigation is based in US District Court, Greeneville Division, Eastern District of Tennessee, in the Sixth Federal Circuit.

In keeping with the normal standards of Federal Class Action lawsuits of this nature, attorneys’ fees and expenses (thirty-three and one-third percent contingency), claims administrator expenses, certain miscellaneous expenses, and payments to named plaintiffs were deducted from the gross settlement fund to result in the net settlement fund of $85,644,095.34. The attorneys will be paid on the same schedule as the plaintiff farmers are paid.

With the Order, checks can now be cut and distributed to 6,086 class members who will receive an average of $14,072 each. Payments are prorated depending on pounds produced and determined to be class-eligible, larger herds will receive significantly more than the average. However, if farmers elected to use third-party representation, those farmers themselves will receive anywhere from 15% to 30% less, depending on the percentage of fees charged by the third-party filer they elected to use.

Dairy Farmers of America, Inc., (DFA) and related entities National Dairy Holdings, LP (NDH), Dairy Marketing Services, LLC (DMS), Mid-Am Capital, LLC, and Gary Hanman, former CEO of DFA, entered into a Settlement Agreement in the class action lawsuit on January 17, 2013, and which was filed with the Court on January 21, 2013.

They were the last remaining defendants to settle in the complex litigation, originally filed in July of 2007, a tenure of six and one-half years. Other defendants Dean Foods, Southern Marketing Agency (SMA), and James Baird finalized their settlement agreements in February of 2012, with final approval by the Court in June of 2012. In the language of all settlements, none of the defendants admitted guilt to the allegations of antitrust and price-fixing for the purpose of depressing prices paid to dairy farmers in Federal Milk Marketing Orders 5 and 7, respectively the Appalachian and Southeast orders.

The settlement agreement for each defendant varies in the terms of the total monetary payments, the terms, timing, and length of the payout schedules, and the conduct changes in the marketplace which will take place over several years. The court retains enforcement and jurisdiction of the Settlement agreements until the last activities per the agreements are expected to occur by the year 2016.

The current DFA Gross Settlement Fund totaled $140 Million Dollars, equal to the Dean Settlement monetary amount. However, the Dean Food Settlement Funds will be distributed over annual payments until the fall of 2016, while DFA elected to borrow funds and make a one-time payment to settle the lawsuit. Honoring the Settlement Agreement, DFA placed the $140 Million in an escrow account in February, 2013. Any interest accrued by the escrow fund is accounted for in the distribution.

In accordance with Class Action procedure, a Fairness Hearing for the Plaintiffs/Farmer Class to make comments was held on April 3, 2013, with Final Approval of the DFA Settlement entered on the Court’s file on May 17, 2013. The Order of Approval had to survive an appeals time frame, and the Claims Administrator had to satisfy the Court’s requirements for meticulous audit and accounting procedures before the funds could be paid to class members.

There is a good possibility, but not a guarantee, that Class members will receive these checks before the end of the year. With the first Dean Foods/SMA Settlement payment issued in January, the Order for Disbursement was filed on January 8, and many farmers received checks beginning two weeks later, on January 22. With the second Dean payment, there was a month before checks were received following the Order.

In a separate portion of the DFA & Related Settlement Agreements, there were approximately 50 documents, a portion of the many confidential documents under seal during the course of the litigation, which the defendants agreed to finally open to the public. Many dairy industry stakeholders across the country have felt the information contained in those documents is as important as the monetary settlements. Those documents have yet to be opened, and it is unknown when they will be.

Too, there were terms in the Settlement Agreement concerning the public announcement of salaries of key DFA management and compensation for board members to be announced. Those announcements depended on actions of the applicable councils and committees within the DFA membership itself hinging on annual meeting dates. It is anticipated those actions should be resolved during the winter and spring of 2014.

Appropriate court documents and additional information should be appearing on the Litigation website in the coming days.

Editor’s note: Dairy Farmers of America agreed to settle the case to avoid even greater financial liability. The co-op admitted no wrong-doing with the settlement.